Innovation: A Definition

Magnifying GlassInnovation fuels successful companies and drives the economy forward.

Michael Porter has suggested that innovation is the central issue in economic prosperity.

But while everyone sings the praises of innovation, what is it exactly? And how do you manage innovation?

Innovation seems like a tricky concept. Take for instance these three different views: 

I believe in innovation and that the way you get innovation is you fund research and you learn the basic facts. ~ Bill Gates

(…) innovation comes from people meeting up in the hallways or calling each other at 10:30 at night with a new idea, or because they realized something that shoots holes in how we’ve been thinking about a problem. ~ Steve Jobs [Click to Tweet!]

I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out. ~ Jeff Bezos [Click to Tweet!]

Is innovation driven by chance encounters, research funding, or frugality? All three leaders, of course, are right. Innovation is a confusing concept because there are different types of innovation:

Incremental and Disruptive Innovation

Incremental innovation refers to small, modest changes to existing products, business models, or business processes. Incremental innovation is a continuous process of improvements and tweaking the status quo. Disruptive innovation brings big changes. It challenges and disrupts the status quo. Disruptive innovation is sometimes referred to as breakthrough or game-changing changes.

Business and Product Innovation

Innovation is often associated with new products – the iPhone or Dropbox, but business model innovation can also drive change and profitability. Amazon’s focus on the long tail of book titles, for instance, was a different way of competing in the book market. Let’s explain what innovation is by comparing it to related concepts like invention, creativity, and entrepreneurship.

Innovation vs. Invention

Innovation is not the same as invention. Invention is a new idea, a new product or a new process. Innovation is about putting an invention on the market. Innovation management, therefore, needs to consider how new ideas are generated, vetted, and implemented to improve company performance. Innovation management requires business and marketing skills to envision how an invention can add value. It needs to consider how ideas can be commercialized.

Innovation vs. Creativity

Creativity is closely related to invention. An invention is the new idea itself; creativity is about the ability to generate novelties and new ideas. Managers often confuse innovation with creativity. They often believe that improving innovation management requires increasing the ability to generate more ideas (i.e. improving creativity). However, companies can usually become more successful innovators by focusing on the commercialization of new ideas. Vijay Govindarajan suggests that managers often feel that hunting for the next big idea is sexier and that they’re good at implementing new ideas, but in fact companies often struggle with the long process of implementing change. As a great innovator says:

Innovation is 1% inspiration and 99% perspiration. ~ Thomas Edison

Innovation vs. Entrepreneurship

Not every entrepreneur is an innovator. You can start a new company or a string of companies without innovative ideas. Entrepreneurship is about managing new ventures, taking initiative and considering risks, but not necessarily implementing innovation. Entrepreneurship, tenacity and a willingness to take risks are, however, required to bring an innovation to market. Entrepreneurship can be seen as part of innovation management.

I hope this article gave you a good overview of innovation.

To get new information we publish on innovation management, sign up using the box at the top-right. Companies of all sizes (from Fortune-500s to growing startups) use software from IdeaGlow to build their own innovation management programs. IdeaGlow is affordably priced and relatively easy to implement. If you’re interested, you can apply for a FREE 30-day trial.

Leila Durmaz

Hello, I'm your author, Leila Durmaz. I spend a lot of my time researching the best practices for innovation management, and writing articles to share them. I hope you find them helpful! I work at Accompa - one of our products is IdeaGlow innovation management software.

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